Although Hawaii often brings to mind visuals of a beach vacation, the Aloha state is also a great place for aspiring entrepreneurs starting a small business.
In addition to the business opportunities available in its booming tourism industry and newer emerging markets, the number of business owners who have made the islands their home means you’ll have a huge entrepreneurial community to tap into—and many state-sponsored business incentives to take advantage of.
If you’re interested in starting a business in Hawaii, here’s what you should know about the state’s business taxes:
What business taxes do you pay in Hawaii?
Your company’s state tax obligations depend on a number of factors, including your business structure, annual revenue, and employer status. Most small business owners can expect to pay income tax, a General Excise Tax, withholding tax, unemployment tax, and any relevant local or industry-related taxes.
Hawaii’s personal income tax
Hawaii’s individual income tax rates range from 1.4% to 11%, depending on your earned income.
How to pay
File and pay your personal income tax returns through Hawaii Tax Online, the website Hawaii taxpayers and businesses use to manage their taxes, by April 20. The tax form you use depends on your residency status: full-time residents of the state use Form N-11, while part-year residents and nonresidents use Form N-15.
If you plan on mailing your tax return, print out your return and mail it to the appropriate address listed on your tax form instructions, along with your tax payment (if applicable).
Partnerships (and LLCs taxed as partnerships) must file a separate partnership tax return for the business itself (Form N-20). These returns must be filed by April 20 as well. Submit payment through the Hawaii Tax Online portal and mail the completed tax form to the address below:
Hawaii Department of Taxation
PO Box 3559
Honolulu, HI 96811-3559
Hawaii corporate income tax
Corporations in Hawaii must pay corporate income tax. Rates range from 4.4% to 6.4% of the business income.
How to pay
Corporate tax returns (Form N-30) are due by the 20th day of the fourth month after the fiscal year ends. For corporations following the calendar year, the due date is April 20. Note that all corporate returns must be filed on the Hawaii Tax Online platform.
The state of Hawaii also requires C corporations to make quarterly estimated tax payments by April 20, June 20, September 20, and January 20. Those who want to pay online can do so through Hawaii Tax Online, while those who prefer to pay by mail should submit payment along with Form N-201V to the address below:
Hawaii Department of Taxation
Attn: Payment Section
PO Box 1530
Honolulu, HI 96806-1530
S corporations, on the other hand, follow a slightly different set of instructions than their C corp counterparts. The due date for these returns is the same (April 20), but the tax form is different.
These returns must be mailed, although the address you send them to depends on whether you’re enclosing payment with your tax form. S corporations with a tax liability of $500 or more make estimated tax payments on the C corporation schedule outlined above.
Hawaii General Excise Tax
All companies that conduct business in Hawaii are required to pay the state’s General Excise Tax (GET). The rate you pay is determined by your business activities:
- 0.15% for insurance commissions
- 0.5% for manufacturing and wholesaling
- 4% for all other products and services
You may choose to pass this tax onto your customers instead, as long as you include the tax in a separate line item on receipts. For more information on this, read the state’s Department of Taxation (DOT) nGET Tax Facts publication.
How to pay
You’ll need a GET license to pay this tax, so register for one through Hawaii Business Express for faster processing. Alternatively, you can submit an application by mail. To do so, complete Form BB-1 and mail it to the address below along with a $20 nonrefundable application fee:
Department of Taxation
PO Box 1425
Honolulu, HI 96806-1425
Note that, if you’re applying for multiple tax licenses with Form BB-1, you may be subject to additional fees. Once you mail in your application, expect it to be processed in three to four weeks.
After you receive your GET license, you must file GET tax returns (Form G-45) on Hawaii Tax Online on a monthly, quarterly, or semiannual basis, depending on your annual GET liability. No matter your filing frequency, your tax return is due by the 20th day of the month after the end of the tax period. All businesses in Hawaii are required to file a GET return, even if they didn’t make any profit during the tax period.
If your annual GET liability is over $4,000, the state of Hawaii requires you to file your tax return electronically. If you don’t meet the tax threshold and prefer to mail in your tax return, submit your return and payment to the Department of Taxation address above.
Each year, businesses must also file a GET return and reconciliation (Form G-49) online by the 20th day of the fourth month after the end of the tax year (April 20 for calendar filers).
For more information on filing periodic and annual GET tax forms, review these instructions from the DOT.
If your business has employees, you’ll need to withhold and pay a portion of employee wages for services performed in the state and services performed by employees who regularly work within the state. These taxes are known as withholding taxes.
Use the formula in the DOT’s employer tax guide to determine your company’s withholding tax rate.
How to pay
Before you can collect and pay withholding taxes, you’ll need to register your business with the state’s Department of Taxation online or by mail (Form BB-1).
Once your company is registered, you’re required to file taxes each quarter using Form HW-14, even if you don’t have any wages to report for the period. Returns are due April 15, July 15, October 15, and January 15.
Additionally, employers need to make withholding tax payments on a regular basis. Your payment frequency depends on your annual withholding tax liability:
- Less than $5,000: Quarterly
- $5,000–$40,000: Monthly
- Greater than $40,000: Semi-weekly
These payments are due by the 15th day of the month following the end of the filing period.
If you expect your annual withholding tax liability to be greater than $40,000, you must file and pay your taxes online. However, the state of Hawaii encourages all employers to e-file their returns for quicker processing and greater accuracy.
Finally, you’ll also need to file an annual withholding tax form (Form HW-30), along with Forms W-2 and HW-2, with the DOT by January 31.
Unemployment insurance tax
Hawaii employers also pay unemployment insurance (UI) taxes. The 2023 tax rate for new businesses is 4% on the first $56,000 of each employee’s wages. Established businesses are then assigned a new rate, which ranges from 1.7% to 6.2%.
How to pay
Register your business with Hawaii’s Department of Labor and Industrial Relations (DOL) online. Then, file and pay taxes by the end of the month following each calendar quarter using Form UC-B6 (found on the HUI website linked above). You’ll need to file this form every quarter, even if you didn’t have any employees during that time period.
If you have any questions about the Hawaii unemployment insurance tax, review the state’s unemployment insurance handbook for employers.
In addition to the GET imposed by the state, many counties have adopted their own local surcharge rates for an average combined state and local sales tax rate of 4.44%.
Depending on your business industry and your offerings, your company may be subject to additional taxes and duties, such as the:
- cigarette, tobacco, and liquor tax
- fuel tax
- public service company tax
- rental vehicle, motor vehicle, and car-sharing vehicle taxes
To make sure your business stays compliant with state and local tax regulations, talk to your accountant or tax professional about what taxes you’re required to pay.
Hawaii tax breakdown by business type
Below is a chart that breaks down what federal and Hawaii state taxes different business entities can expect to pay. Keep in mind that owners and members of pass-through entities pay federal income taxes through their personal returns.
|Business type||State income taxes||General Excise Tax||Withholding tax||Unemployment tax||Federal income taxes|
|C corporation||Yes||Yes, if you don’t pass it on to customers||Yes, if you hire employees||Yes, if you hire employees||Yes|
|S corporation||Yes||Yes, if you don’t pass it on to customers||Yes, if you hire employees||Yes, if you hire employees||Yes (pass-through)|
|LLC with C corp election||Yes||Yes, if you don’t pass it on to customers||Yes, if you hire employees||Yes, if you hire employees||Yes|
|LLC||Yes||Yes, if you don’t pass it on to customers||Yes, if you hire employees||Yes, if you hire employees||Yes (pass-through)|
|Partnership||Yes||Yes, if you don’t pass it on to customers||Yes, if you hire employees||Yes, if you hire employees||Yes (pass-through)|
|Sole proprietorship||Yes||Yes, if you don’t pass it on to customers||Yes, if you hire employees||Yes, if you hire employees||Yes, by way of individual income tax|
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